Is Salary Transparency Right For Your Organization?
Discussing your salary with coworkers at work is still considered a no-no in most American organizations. Employers have traditionally frowned upon open workplace discussions about sensitive and potentially emotional hot-button topics like race, religion, and politics — and income levels.
Our Employee Engagement report found that transparency was the number one factor that contributed to employee happiness. So is it a surprise that more companies are moving towards a transparent organizational culture? With that transparency, some companies are embracing a new level of openness around salary discussion. And some have even made employees’ salaries public to everyone in the organization.
A recent LinkedIn article highlights two young companies that are reversing their avoidance of salary discussions. These employers are fostering a new level of discourse around fair and equitable wages by publishing paycheck data on all of their employees. Have they experienced an HR firestorm? It turns out, there are unexpected benefits as well as drawbacks.
Salary Transparency Pros and Cons
One interesting benefit of an open discussion of employee pay was that employers realized their salary models were not designed to foster employee growth. By engaging in a salary review process before going public, these companies discovered the limitations of the salaries they had put in place. Ultimately, changing pay structures not only benefited employees; it attracted a new crop of forward-thinking job candidates who had a better understanding of company culture even before their first interview.
Just make certain that, before you go public, you can justify the reasoning behind each salary level.
When employees discover wage inequities, their frustration accelerates. Salary transparency helps eliminate costly staff turnover. When employees discuss wages secretly, as they often do, they don’t see the mitigating factors HR managers weigh into candidate selection. So pay levels can appear unfair, and employees develop distrust, with employee churn as the ultimate result.
Transparency about salaries bleeds over into all aspects of an honest and open work environment.
Be Careful What You Wish For
A Fortune article cited a survey from the Institute for Women’s Policy Research stating that more than half of American workers are either discouraged or outright prohibited by company policy from sharing their pay scale.
Employers that are considering this new approach to salary transparency should carefully evaluate the ramifications of such an extreme workplace makeover. It may be right for your company — or it may not.
For example, performance-based pay makes it harder to compare apples to apples because all variables may not be appropriate to share. Also, if you have a company that pays outrageously high salaries to top executives and neglects to pay a living wage to the employees on the bottom, you’ve got problems that will be heightened by over-sharing.
For now, whether that’s a good or a bad thing is still up to you and what’s best for each individual company.
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